State-owned lender Postal Savings Bank of China raised about HK$ 58 billion ($7.4 billion) in its initial public listing offering and is set to go public in Hong Kong on Sept 28 -- making it the world's biggest IPO since Alibaba Group went public raising $25 billion in September 2014.
PSBC plans to price its sale of 12.1 billion shares at HK$4.76 per share, below the midpoint of a marketed range from HK$ 4.68 to HK$5.18 a share, according to a report in The Wall Street Journal.
Clarence Kwok, chief investment consultant at Bluestone Securities, said that PSBC had priced itself near the bottom of analyst expectations, reflecting the market's low response to purchase the H shares, and said the bank's oversubscription rate might be less than 1.6 times.
He said that usually companies lowered the stock price to improve an issue's popularity－and the subscription rate during the good times for the mainland bank shares could reach five to six times.
Kwok added, however, that currently the market fears that Chinese mainland banks are suffering from bad debt and shrinking profits under a slowing economy. Additionally, the fact that the company's 1.22 price to book ratio and 9.52 price to earnings ratio were higher than the respective sector average of 0.9 and 5.6 also was dragging on market sentiment.
According to the PSBC prospectus, the nonperforming loan ratio of the company reached 0.78 percent as of June 30 this year and the company's allowance coverage ratio was 286.71 percent as of March 31 this year.
Kwok said the nonperforming ratio was lower than the average 1.73 percent of the big commercial banks and the allowance coverage ratio was higher than the other large commercial banks' average of 154.73 percent, which was an advantage.
According to the prospectus, six cornerstone investors have subscribed more than 70 percent of the H-shares. These are CSIC Investment One Ltd, Shanghai International Port Group (HK) Co Ltd, Victory Global Group Ltd and State Grid Overseas Investment Ltd, China Chengtong Holdings Group Ltd, as well as Great Wall Pan Asia International Investment Co Ltd.
Financial commentator Dennis Huang said this year the large State-owned listing corporations were mostly supported by "national team" investors and so was Postal Savings Bank of China. He also pointed out that in recent years, the stock market usually moved to higher ground close to October, enabling the large State-owned companies to go public.
Looking at expectations for its stock market trading debut, Kwok said he saw the share price topping the offer price and then remaining flat initially. But in three to four months the big State-owned stock would be probably included in the China Enterprises Indices and the share price would bounce back, he said.
State-owned lender Postal Savings Bank of China raised about HK$ 58 billion ($7.4 billion) in its initial public listing offering and is set to go public in Hong Kong on Sept 28 -- making it the world's biggest IPO since Alibaba Group went public raising $25 billion in September 2014.
According to the PSBC prospectus, the nonperforming loan ratio of the company reached 0.78 percent as of June 30 this year and the company's allowance coverage ratio was 286.71 percent as of March 31 this year.
